Earnings Call Transcript - BLNK Q1 2022

Operator, Operator

Good afternoon, ladies and gentlemen and welcome to today’s Blink Charging Company First Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode but we will open the floor for your questions after the presentation. It is now my pleasure to turn the floor over to your host, Jennifer Belodeau, IMS Investor Relations. Jennifer, the floor is yours.

Jennifer Belodeau, Investor Relations

Thank you. Good afternoon, everyone, and welcome to Blink Charging's first quarter earnings investor call. On the call today, we have Michael Farkas, Chairman and Chief Executive Officer, Brendan Jones, President, and Michael Rama, Chief Financial Officer. Please note that there’s a slide presentation accompanying today's earnings call, where viewers can follow along. The slides can be accessed on the Investor Relations section of the Blink Charging website. I’d now take a moment to read the Safe Harbor statements. This conference call contains forward-looking statements as defined within Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements include those regarding the intent, belief, or current expectations of Blink and members of its management, as well as the assumptions on which such statements are based. Prospective investors are cautioned that such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in Blink's periodic reports filed with the SEC and that actual results may differ materially from those contemplated by such forward-looking statements. Except as required by federal securities law, Blink undertakes no obligation to update or revise forward-looking statements to reflect changed conditions. With that out of the way, I’ll turn the call over to Michael Farkas, Chairman of Blink Charging. Go ahead, Michael.

Michael Farkas, Chairman and CEO

Good afternoon, everyone. Thank you for joining us. We delivered a strong start to 2022, highlighted by record revenue of $9.8 million, an increase of 339% over the first quarter of 2021, driven by exponential growth in both product sales and service revenues. Our record first quarter results are reflective of the solid platform and reputation that we've built in the EV charging industry, as partners and customers recognize Blink as a leading provider of charging technology and services. In the quarter, we contracted and deployed 3,174 commercial and residential chargers, an increase of 99% compared to the same quarter last year. We continue to see success winning new grant and rebate awards from various government programs, receiving $3 million in awards in the first quarter of 2022 and $30 million since January of 2021. Federal and state grant and rebate programs have been an integral part of our growth, providing us with numerous opportunities outside of the traditional sale of our products to expand our charging footprint, which Brendan will speak more in depth about later on in the call. The legislative environment surrounding the EV industry is incredibly favorable, and we believe we are positioned to win many more grants and rebates as federal, state, and local governments allocate the $7.5 billion from the Biden administration for state-of-the-art EV charging infrastructure. Following the close of the first quarter, we announced our acquisition of Electric Blue or EB Charging, a leading provider of integrated EV charging and sustainable energy solutions in the United Kingdom. This acquisition expands our European presence into the UK and adds over 1,150 chargers installed or committed to delivery, adding to the Blink charging footprint. A key part of Blink’s strategy is to make acquisitions and to establish multi-year exclusive partnerships and increase charge deployments and our market reach. With the acquisition of EB Charging, we are now present in over 19 countries, including the US, Belgium, UK, Greece, and nine countries in Latin America as well as others. The EV industry is still in its early stages and poised for massive exponential growth over the next decade and beyond. As such, I'd like to take a moment to reiterate how much we believe the opportunity Blink sees for future growth as a leading provider of EV charging solutions. According to the International Energy Agency, global EV sales are projected to grow at a CAGR of 24% from 2021 to 2030, with the number of vehicles sold increasing from 3 million in 2020 to about 25 million in 2030. This projected increase in electric vehicles creates an immediate demand for robust EV charging infrastructure, with a need for over 120 million EV chargers globally by 2030, as compared to the only 2.8 million chargers available globally in 2021. As a leading provider of EV charging technology, we believe this growth presents a tremendous opportunity for Blink to significantly expand our charging footprint over the next decade and beyond and exponentially increase our share of the market. As you can see, the EV industry continues to offer significant potential for us, and we are energized to take advantage of it.

Brendan Jones, President

Thanks, Michael, and good afternoon, everyone. It is a pleasure to speak with everyone today. As you can see from the logos on slide 8, we are fostering partnerships and winning contracts to bring innovative EV charging solutions to a wide variety of verticals. We've won numerous multiyear contracts with well-respected commercial enterprises, healthcare facilities, plant communities, and municipalities. We are seeing tremendous opportunities to continue this trend in 2022, including two new partnerships with the State of Massachusetts and Virginia. These collaborations are an integral part of our business as entities in both the public and private sectors push for the widespread adoption of electric vehicles and the establishment of a robust EV charging infrastructure. We are pleased to be providing our state-of-the-art charging solutions to our valued partners, and we look forward to teaming up with additional businesses and municipalities that want to offer innovative EV charging technology to their customers and residents. Within the last 12 months, Blink has contracted, sold, deployed, or acquired over 19,720 chargers, both domestically and internationally, bringing the total charge account for the company to over 36,000 since Blink's inception. We have a healthy mix of deployments in the United States and abroad, with 57% of total Blink chargers deployed in the United States and 43% deployed internationally. As of the first quarter of 2022, Blink has provided service to over 270,000 registered members and unique users worldwide. Consumer demand for electric vehicles is steadily increasing, meaning the need for robust and reliable EV charging infrastructure has never been more necessary. Our global network of chargers has steadily expanded quarter-over-quarter, and we expect this increase to continue as EV demand grows. Slide 10 gives an overview of our charging stations deployment in key geographic locations throughout the United States and Europe. We strategically identify our locations based on several criteria, including EV concentration and driving habits, population and density figures, historic and forecasted traffic patterns, and future market growth potential. In the first quarter, we deployed charging stations across six countries and 40 U.S. states and territories, working with both local and state government agencies and numerous companies. We believe Europe presents a tremendous growth opportunity, and we've aggressively increased our presence there, particularly with our latest acquisition, EV Charging.

Michael Rama, CFO

Thank you, Brendan, and good afternoon, everyone. Turning to slide 16. Total revenue in the first quarter of 2022 grew to $9.8 million, another record for the company, and an increase of 339% compared to the first quarter of 2021. Product sales in the first quarter of 2022 were $8.1 million, an increase of 382% over the same period in 2021. As customers purchase greater volumes of our commercial chargers, DC fast chargers, and residential charges, as well as revenue generated through our European subsidiary, Blue Corner, which was acquired in May 2021. First quarter 2022 service revenues, which consist of charging service revenues, network fees, and ridesharing revenues were $1.5 million, an increase of 346% compared to the first quarter of 2021. The year-over-year growth is primarily due to the increased utilization of our chargers and the increased number of chargers on our Blink network and revenues from the Blue Corner acquisition. Gross profit for the first quarter of 2022 was approximately $1.6 million, an increase of over 1500% compared to the prior year. We continue to look for ways to reduce our component costs, especially in light of the ongoing supply chain disruptions occurring globally. Operating expenses in the first quarter of 2022 were $16.6 million, compared to $7.5 million in the prior year period. This increase reflects our long-standing commitment to investing in our business in anticipation of domestic and international growth, as well as operating expenses from Blue Corner, which was acquired in 2021. We continue to seek out and hire talented individuals that will contribute to our company's growth and success, and we're committed to the research and development of innovative new products that place our product line at the forefront of the EV charging industry. In the third quarter of 2021, we began the practice of presenting adjusted EBITDA. Our management believes this non-GAAP measure is useful in evaluating our company's core operating performance because it excludes significant non-cash or nonrecurring expenses. Adjusted EBITDA for the first quarter of 2022 was a loss of $12.4 million, compared to a loss of $6.5 million in the prior year period due to the previously mentioned higher operating expenses. Adjusted EBITDA as a percentage of revenues for the first quarter of 2022 improved by 162 basis points compared to the first quarter of 2021. Now turning to Slide 17. Our revenues and gross profit performed well in the first quarter of 2022, continuing the upward trend that we've seen over the past several quarters. As we execute our own and operator strategy and the demand for our reliable and convenient EV infrastructure increases, we believe we are well positioned to continue driving increased revenues and gross profit moving forward. We believe we have sufficient cash on hand to fund our operations. We're pleased to begin 2022 with a strong start and have achieved record revenues for the second quarter in a row.

Michael Farkas, Chairman and CEO

Hello. We started 2022 by delivering tremendous results highlighted by an increase in year-over-year revenue of almost 340%. With our strategy and product offerings, we are well positioned to drive growth throughout the balance of the year. We're energized by what lies ahead for Blink and capitalizing on the many opportunities that the EV industry is providing. With that, we will now open the call for questions.

Stephen Gengaro, Analyst

Thanks, and good afternoon, everybody. I'm curious about the Electric Blue acquisition. Can you just give us a sense of when we think about the 1,150 chargers? I know some are either installed or planned to be installed. Given the maturity or higher majority of the European market versus the US, how do we think about the revenue content that brings on the charging side?

Michael Farkas, Chairman and CEO

I want to note not only the revenues that will be derived from the utilization of the charging stations, but I'll let Michael Rama address that in more detail. You have to look at the transaction itself. You're talking about a total potential cost of $23 million. The acquisition at first before potential earn-outs was about $13 million. We bought a company that has about $16 million in order book. So, it's actually more than what we're paying for the company. In addition, today, they buy hardware from a third party. We're now going to fill those orders using Blink equipment, removing their reliance on a third-party network company. So, again, there are a lot of cost savings. In addition, it gives us a tremendous footprint in the UK. They've won over 40 different municipal contracts throughout the UK. So, it's not only just the pipeline that they have of units today, but each of those locations has additional parking spots that now become ours for the future. I'll let Michael address the revenue side in more detail.

Michael Rama, CFO

Right now, they're still fairly heavily on product sales. But obviously, as we start building out the footprint and additional Blink model, we'll start to see a little bit more on the charging side. But as Michael said, they had an order book of over $16 million. It's an entry into the UK market. So, this is really what were the driving factors, along with the governmental participation that’s also involved. So we're very encouraged with this acquisition.

Stephen Gengaro, Analyst

When we think about excluding acquisitions, any guidance for how we should think about full-year 2022 CapEx?

Michael Rama, CFO

We're monitoring the inventory procurement with the supply chain. So, absent any acquisition, we see the profile being fairly similar to what we've done in the first quarter moving forward.

Will Jellison, Analyst

I want to start with a follow-up on the EV charging question just asked. Can you talk a little bit more about the process you went through in buying the business?

Brendan Jones, President

It’s been a nine-month endeavor. We started thinking about it even further back than that. We went through an analysis of organic growth and establishing a presence just as a Blink company in the UK and then we looked to grow through acquisitions. Ultimately, we decided on purchasing a company that operated and was fully accepted within the UK business community as well as within the municipal community. We went through several different companies before we landed on EB. What we liked about EB was their owner-operated model and their extensive ability to transition from owner-operator to in-home sales of chargers. They also won multiple municipal grants and tenders, making them one of the biggest tender winners out there today. We believe that with the additions we’re providing and the new hardware we can integrate, we will take EB to the next level.

Will Jellison, Analyst

Can you talk a little bit more about any supply chain challenges you might have encountered during the quarter?

Brendan Jones, President

We put a lot of effort in 2021 into securing our product lines for 2022. Thus far, particularly on the L2 chargers, both in Europe and the United States, we have had limited issues because we had already secured the components leading into 2021. We continue to do that for leading into 2023. As everyone knows, it's a challenging market right now, and if you're not ahead of the demand, you're going to find yourself behind. So, we planned ahead.

Sameer Joshi, Analyst

Congratulations all for a very successful quarter. I just had a few questions on the new product launch that was introduced at the beginning of the year. What is the timeline for actual deployment of these products?

Brendan Jones, President

The MQ, which is the fleet charger and its supporting software, will launch within the next 30 days. Right behind that, the HQ 200 will launch almost simultaneously but with a slight delay. As we move through summer and into Q2, we will launch the new Wallbox late summer. Then in Q3, we will have the IQ Vision product out there. We have successive launches planned throughout this quarter and next, moving into the end of Q3. A lot of exciting activity is ahead.

Michael Farkas, Chairman and CEO

There's always going to be opportunities where someone needs to upgrade. But we believe most of the demand is for additional charging as we expand. For example, Massachusetts now mandates that 10% of every parking lot contains EV chargers. So we will focus on that potential for additional installations. The fleet software, fleet portal, and MQ are new products, and we expect significant penetration and growth in that segment.

Michael Rama, CFO

When we buy the chargers, they come in as inventory on our balance sheet. If they get sold as part of hardware sales, they get written off as part of cost of sales. If they are transitioned into our operator model, they get turned into fixed assets and depreciated over the average lifespan.

Sameer Joshi, Analyst

What is the number of employees now following the EB acquisition?

Brendan Jones, President

Including EB, we're just north of 230 employees.

Oliver Huang, Analyst

I just wanted to see if there was any incremental color on the quarter-over-quarter trends with respect to charging service revenue and gross margins.

Michael Farkas, Chairman and CEO

We saw actual increases in charging revenue across the board, and there were significantly more days in Q4 compared to Q1. Each day makes a difference in total kilowatt sold. So, a few seasonal and one-off factors played a role in the decrease.

Stephen Gengaro, Analyst

How should we think about the operating expenses as we move forward here over the next year or two?

Michael Farkas, Chairman and CEO

We will continue investing in growth. As a percent, we expect to see improvement over time with anticipated scale from our revenues. There will be some ramp-up of expenses in the short term, but we believe we will moderate this over the next 18 to 24 months. Thank you, everyone, for joining us today. We are extremely energized by the progress that we've made this past quarter, and we're excited about the many opportunities on the horizon as a leader in the EV charging industry. We look forward to speaking with you again very soon.

Operator, Operator

Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.